India’s Share of Global FDI Inflows Shrinks Sharply

The World Investment Report 2022 shows that the structure of global foreign direct investment (FDI) flows has been affected significantly by the pandemic. The report brought out by the United Nations Conference on Trade and Development (UNCTAD) indicates that global FDI inflows staged a smart recovery in 2021 rising by a substantial 64.3% to touch $1.58 trillion, thus surpassing the pre-pandemic flows. This is in sharp contrast to the 35% fall in FDI inflows to $963 billion in 2020.

A major consequence of the pandemic was that the share of FDI inflows to developed economies slipped to just around one-third in 2020, the lowest recorded. Though the FDI inflows to developed economies more than doubled to $746 billion in 2021, its share in global FDI inflows still remained lower than that of the developing economies. A major reason for the shrinking share of developed economies in global FDI inflows is the decline of inflows into the European Union (EU) for two consecutive years, which reduced its share in global FDI inflows from around a quarter to less than a tenth.